Staff costs 

* The Group's pension cost for the year is specified in note 39.
 

Pension costs exclude payroll tax. Pension obligations for current and former Presidents and Executive Vice President have been secured through insurance and pension funds. The obligations secured by pension funds amounted to SEK 456m (456). The Group has not pledged any assets or other collateral or committed to contingent liabilities on behalf of any of the above-mentioned group of senior executives. 

Information regarding senior executives

Senior executives refer to members of the Board Directors, the President and CEO, and members of the Group Executive Management. Other senior executives refer here to members of the Group Executive Management who are reporting directly to the president and CEO.

The Board’s Remuneration Committee, consisting of at least two and not more than five Board members, annually reviews the remuneration guidelines for senior executives and prepares a proposal for the Board. Using this proposal as a basis, the Board proposes annual remuneration guidelines for senior executives for approval by the AGM. Based on the guidelines resolved by the AGM, the Board decides each year on the remuneration terms for the CEO, other senior executives and the head of Internal Audit.

When determining the individual remuneration, each top executive shall be evaluated in accordance with an acknowledged structured benchmark procedure for establishing and comparing salaries and benefit data. The remuneration package for the top executives may include the following main compensation components, base salary, STI programme, LTI programme, benefits and pension.

Variable remuneration in the form of short-term and long-term incentive (STI and LTI) programmes must be tied to relevant, predetermined and measurable criteria designed to promote the Group’s long-term value creation. For variable remuneration paid in cash, the limits on the maximum outcome are determined for each senior executive. The Board will also consider conditions that will allow it to reclaim such remuneration to the extent it was paid based on information that later proved to be blatantly incorrect. At least 60 per cent of variable remuneration will be deferred for at least three years and will be contingent on whether the criteria on which the remuneration is based have proven to be sustainable long-term and that the Group’s position has not deteriorated significantly. If the terms for payment have not been met, the deferred remuneration will be revoked wholly or in part. At the time of the 2010 AGM no STI programmes had been adopted. The Board has the right, however, to decide on STI programmes for each senior executive. At present the Group has not adopted any LTI programmes. Every LTI programme must be approved by the AGM. All fixed remuneration is paid out by the Parent Company in accordance with sound contracts. Fees paid to the CEO and other senior executives for Board assignments are deducted against salaries, unless otherwise agreed. Payment of variable remuneration in accordance with each STI or LTI programme must be approved by the Board.
 

No expenses were recognised during the year for previous Board members other than what is stated below. The Group does not have any pension obligations for Board members other than Carl Erik Stålberg.
 

Carl Eric Stålberg is entitled to a defined benefit pension from the age of 60. His pension entitlement is the vested portion of 75 per cent of his previous salary. The vested portion is based on the length of his employment in months divided by 360. The Parent Company also pays a pension premium of SEK 360 000 per year. Previously vested pension benefits remain unaffected. When Carl Eric Stålberg stepped down as Chair of the Board, he received severance of SEK 4 256 000.

 Jan Lidén stepped down as President on 28 February 2009. After his retirement on 30 April 2009 the bank has no further obligations to Jan Lidén.

The table includes compensation paid by all Group companies, Swedish as well as foreign, and refers to compensation for the time these individuals were members of Group Executive Management, excluding the CEO. For 2010 Thomas Backteman, Håkan Berg, Göran Bronner, Marie Hallander Larsson, Cecilia Hernqvist, Erkki Raasuke and Annika Wijkström were members of Group Executive Management for the entire year. Mikael Björknert, Stefan Carlsson, Kjell Hedman, Catrin Fransson and Magnus Geeber were members of Group Executive Management for parts of the year. On 31 December 2010 Group Executive Management was comprised of Thomas Backteman, Håkan Berg, Mikael Björknert, Göran Bronner, Stefan Carlsson, Catrin Fransson, Magnus Geeber, Marie Hallander Larsson, Cecilia Hernqvist, Erkki Raasuke and Annika Wijkström. Variable remuneration for other senior executives of SEK 0 (–955) was charged against income.

Pension obligations

Among the other eleven senior executives as of year-end, two are entitled to a lifetime defined-benefit pension from age 60, six others are entitled to a lifetime defined-benefit pension from age 62. One person has a retirement age of 62 and a premium of 35% of the salary up to a maximum of 80 income base amounts to a defined contribution insurance. For one senior executive, the Group pays a predetermined amount of SEK 945 000 per year to a defined contribution insurance. For one senior executive, there is no pension commitment. For eight persons, a deduction is made for previously vested pension entitlements. Benefits are accrued continuously until retirement and are vested after they have been accrued.

For two of the eight individuals with defined-benefit pension entitlements, the pensionable salary for 2004 in the defined-benefit pension plan has been locked in terms of income base amounts, in addition to which they receive a supplementary defined-contribution pension where the Parent Company has committed to pay the premiums for a company-owned endowment insurance for the equivalent of 35 per cent of salary segments not secured by the defined-benefit entitlement.

Six of the eight individuals with defined-benefit pension entitlements receive a supplementary defined-contribution pension where the Parent Company has committed to pay the premiums for company-owned endowment insurance for the equivalent of 35 per cent of salary segments between 30 and 80 income base amounts.

Termination conditions

If terminated by the company, salary is payable during the term of notice of 6–12 months. In addition to severance pay for 12 months. A deduction is made for any income earned from new employment. For two senior executives, the severance is pensionable. If a senior executive resigns, the term of notice is not more than 12 months and severance cannot be paid unless they are terminated due to a serious breach of contract on the part of the bank.

Limits due to agreement with National Debt Office

According to its agreement with the National Debt Office, Swedbank AB has pledged, among other things, to ensure that the following applies to the five highest paid senior executives:

* The base salary or other fixed compensation paid to any executive may not exceed the compensation level determined prior to 20 October 2008.

* Variable compensation, including options, may not be determined during the time period during which the bank’s contract with the National Debt Office applies (“the contractual period’’), and circumstances related to the contractual period may not be considered when variable compensation is calculated due to previous contracts and no variable compensation determined before the contractual period may be executed or paid during the contractual period.

* With regard to severance, the terms may not be more favourable than stipulated in the employment terms for senior executives of state-owned companies.

FFFS 2009:6

Information according to the Financial Supervisory Authority’s regulations and general guidelines (FFFS 2009:6), will be published on Swedbank’s website under corporate governance.

Short-term incentive program: Programme 2010

Terms

Swedbank’s Board of Directors resolved in 2010 on a performance-based remuneration programme for 2010 (“Programme 2010”), where the remuneration is divided into cash and shares. The programme includes broad-based personnel categories and is a result of the Group’s efforts to adapt its remuneration structure to a new view of variable compensation that has taken shape following the financial crisis. The programme does not include senior executives. The employees included in Programme 2010 can qualify, to the extent certain predetermined performance targets are reached in 2010, for additional remuneration in early 2011. The equivalent of 40-60 per cent of the remuneration will be issued in the form of cash, which will be paid out in early 2011. The remaining remuneration is intended to be allotted in the form of contingent rights, performance rights, which give participants the opportunity to receive ordinary shares in Swedbank AB without cost in February 2014. Programme 2010 distinguishes risk-takers from non-risk-takers, where risk-takers are proposed to receive 60 per cent of their remuneration in the form of performance rights, while for non-risk-takers this portion is 40 per cent.

Each performance right entitles the holder to receive one ordinary share in Swedbank AB without cost on the delivery date, in February 2014, provided that the participant remains an employee. Since the performance rights are entitled to dividends, holders will be compensated with additional performance rights corresponding to dividends that the ordinary shares qualify for until the delivery date. Deferring the remuneration to 2014 facilitates a later evaluation of whether the outcome that the remuneration was based on was sustainable long-term. If not, the Board has the right, at its discretion, to amend the terms and reduce the number of ordinary shares that the performance rights entitle their holders to. The value of the estimated remuneration for Programme 2010, cash as well as performance rights, amounted to SEK 388m social charges included, of which recognised expense in 2010 amounted to SEK 255m. The allotment of the share-based is estimated to result in a dilution of approximately 0,1 %. The Board’s resolution that part of the remuneration will be deferred and eventually paid in the form of shares was made contingent on the approval of the 2011 AGM. If the AGM does not approve the share-based payment, remuneration may be paid in cash.

C-shares

Swedbank intends to fulfil its obligation to ensure that ordinary shares are transferred without cost to those who qualify according to Programme 2010 by introducing a special class of shares, C shares. The C shares will be issued with the approval of the 2011 AGM through a directed issue to a financial institution engaged specifically for this purpose, after which Swedbank AB will repurchase the shares and convert them to ordinary shares followed by delivery to qualified holders of performance rights.

Reporting of share-based payment

Since the delivery of ordinary shares in Swedbank AB is contingent on the holder of the performance rights remaining an employee on the delivery date, the share-based payment is accrued for approximately 50 months, from 2010 through February 2014.

Each performance right has been valued based on the anticipated price of the common share on the allotment date 2011, since each performance right entitles its holder to one ordinary share in addition to compensation for dividends that the performance rights do not qualify for. The reported cost of Program 2010 may change during period extending until February 2014, since the performance rights’ value are finally determined at the AGM 2011 and since the number of perfomance rights are continuously reassessed. Social insurance charges are calculated and recognised continuously based on market value and ultimately determined at the time of settlement.

The fair value of one performance right corresponds to estimated stock-exchange rate for one ordinary share at grant date, since one performance right entitles to one ordinary share with additional ordinary shares that compensate the value of the dividends the ordinary shares have been entitled to during the vesting period.